Barriers to expansion on the High Street

Following on from yesterday’s review of barriers to entry and the High street, we now move on to expansion. Again we have evidence that the structure of existing locations can act as a barrier to expansion. “Location strategies of multiples have shifted the retail center of gravity away from the High Street” (Karamychev & van Reeven, 2009).

However, there is evidence for expansion of specific sectors on the High Street , e.g. convenience stores and independent stores; Local Data Company’s Openings and Closures 2013 report has covered the rise of independents on the High Street (over 2000 stores) and the exiting of multiples towards out-of-town retail parks and agglomerations.

The convenience sector has also expanded its presence on the High Street, and whilst there has been criticism of the dominance of multiples in this sector, a Competition Commission report that concluded that it could “not find any significant distortions in competition between large grocery retailers and convenience store operators”. As a result, it did “not consider that the expansion into convenience store retailing by large grocery retailers such as Sainsbury’s and Tesco is having an adverse effect on competition” (Competition Commision, 2007, p. 14).

Wrigley et al. (2009) suggested that the opening of a big supermarket in the city centre can generate urban buzz (Storper & Venables, 2004) and positive spill over effects to the High Street as a result of ‘linked trip’ behaviour.
However, they found it can also accelerate the exit of small stores from isolated/peripheral elements.

A ‘non causal linkage’ between growth of population and household income in the catchment area and supermarket entrance and increased trade is supported by Experian/Goad and highlighted in Wrigley et al.’s (2009) work. Significant increases in the number of small stores can be seen in town centres/high streets with a more slowly growing catchment which was simultaneously experiencing population-composition change in terms of increasing ethnic diversity. For example, increases in independent convenience stores are linked to catchment-area expansion of Central/Eastern European, Asian, and other groups; what Guy (2008) refers to as the `Polish grocer’ effect.

In conclusion, Wrigley and Dolega (2011) proved that higher floorspace occupancy by key/`magnet’ retailers on the High Street does not affect expansion, and also increases resilience. In addition, our High Street UK 2020 identifies the role of local management in reducing barriers to entry and expansion. Business improvement districts are engaged in various business retention, expansion and attraction efforts (Gross, 2005).

The relative influence of all these factors will be explained at our free High Street UK2020 conference in Manchester on 10th July 2014.